Creating Competitive Career Pathways for Low-Income Americans through a Sector-Focused Employment Training Initiative
In order to help all American workers and strengthen the national economy, the next administration should establish a Sector-Focused Employment Training Initiative (SETI) to coordinate and expand evidence-based sectoral employment training programs across the U.S. workforce. SETI would help address persistent wage inequality and limited career advancement for low-income workers, equipping millions of Americans to contribute to and prosper alongside critical U.S. industries.
Sectoral employment training programs offer a proven, evidence-based way to generate substantial and long-term employment and earnings gains for participants. These programs provide low-income and non-traditional workers (i.e., workers without a high school or college degree) with access to higher-wage jobs in better paying sectors with opportunities for advancement. There has been encouraging movement towards integrating sectoral approaches into federal job training programs, but without coordination and firm grounding in evidence, these programs risk being fragmented and ineffective. SETI would work closely with federal programs, local workforce development systems, and key industries to coordinate and expand sectoral employment programs in direct response to local workforce needs. Sectoral employment programs target in-demand, high-wage occupations and focus on breaking down barriers to employment through training, mentorship, and comprehensive supports.
SETI would ultimately create pathways for millions of Americans to enter in-demand careers with long-term growth trajectories, strengthening both the competitiveness and prosperity of U.S. industries.
Challenge and Opportunity
The state of wage inequality and economic mobility in the United States
Workers in the U.S. have experienced decades of skyrocketing wage inequality, with the highest earners increasingly pulling away from middle- and low-wage workers. From 1979 to 2018, the top 0.1 percent of earners saw their earnings grow fifteen times faster than the bottom ninety percent. In 2022, the median weekly earnings of Black full-time workers was approximately 83 percent that of all full-time workers. These disparities often stem from structural barriers to opportunities faced by people of color in the American job market. Despite the historically fast wage growth that low-wage workers experienced from 2019 to 2023, large racial, educational, and gender wage gaps persist. These gaps are especially pernicious as American workers are encountering major affordability challenges, including meeting basic needs such as housing and healthcare.
It is increasingly difficult for non-college-educated workers to gain employment in high-paying occupations with career advancement opportunities. Opportunities for upward mobility in many industries with a high concentration of low-wage workers are limited, and though some pathways exist, access to them is unequal. Black, Hispanic, and female workers disproportionately experience low wage mobility. The downsizing of once prosperous industries has also left many Americans, especially those without college degrees with fewer opportunities for jobs with meaningful career advancement. For example, from 1979 to 2019 America lost 6.7 million manufacturing jobs (a 35 percent decrease), which previously gave adults with a high school education a path into the middle class. Many of these jobs were replaced by lower-wage service jobs, but a resurgence of manufacturing jobs are now at risk of being unfilled due to skills gaps.
As rapid advancements in automation and artificial intelligence are projected to shift the types of jobs Americans hold, policymakers must act now to ensure that workers can obtain the skills needed to thrive in a changing labor market and to meaningfully shrink wage inequities. Historically, technological change in labor markets has unequally benefitted college-educated workers to the detriment of non-college-educated workers, but it does not have to in the future. AI has the potential to restore middle wage jobs, but only if it is implemented thoughtfully. Policymakers must urgently invest in evidence-based sector-focused employment training programs to ensure workers benefit from, rather than are displaced by, emerging technologies. These targeted training programs will provide workers with in-demand skills for careers with long-term potential for upward mobility.
Creating competitive career pathways through sector-focused employment programs
Sectoral employment programs train job seekers, typically low-income adults and those with non-traditional backgrounds (i.e. those whose educational and/or training background is different from traditional expectations for their role) for high-quality, in-demand employment with opportunities for longer-term career advancement. In contrast to traditional job training programs, sectoral employment programs target in-demand occupations and focus on breaking down barriers to employment through training, mentorship, and additional supports. Programs work with local employers to identify in-demand jobs with high starting wages and opportunities for advancement, and equip participants with the technical and general career readiness skills and credentials to succeed in both the targeted jobs and in the labor market more broadly. Sectors typically include healthcare, IT, and manufacturing.
Among many workforce development models, sectoral employment training programs stand out for their proven ability to produce and sustain significant wage gains. A review of four randomized evaluations of several sectoral employment programs highlights their effectiveness in consistently boosting employment and earnings. These programs lead to substantial and lasting earnings gains (a 12–34 percent increase) primarily by helping workers access better-paying, higher-quality industries and occupations. Additionally, these programs provide training in certifiable and transferable skills which can enable job mobility.
Sectoral employment programs can also be cost-effective by increasing employee income, which in turn generates additional tax revenue for the government to help offset some of the program costs. Preliminary, ongoing research by Nathan Hendren and co-authors, suggests the returns from this increased tax revenue can be substantial. For example, initial analyses of three key sectoral employment programs (Project QUEST, Year Up, and WorkAdvance) suggest that just using estimated incomes over the observed follow-up time frames, the benefits they provide to participants exceeds the net cost to the government—meaning that the marginal value of public funds (MVPF) is greater than one. What is more, if the increase in earnings observed over the study period persisted for 20 years or more, the increase in tax revenue would offset the program costs entirely.
Meeting a moment for American workers
SETI would build on recent federal investments and a strong bipartisan movement to support the American worker. There is significant bipartisan support for strengthening national infrastructure and technological advancement by investing in workforce development, as evidenced by the passage of the Bipartisan Infrastructure Law (BIL) and the Creating Helpful Incentives to Produce Semiconductors Act (CHIPS). Nine regional Workforce Hubs help implement federal investments to ensure Americans get connected to the quality jobs created through these significant federal investments. Importantly, additional key infrastructure for advancing workforce development programs already exists through the Workforce Innovation and Opportunity Act (WIOA), which has a goal of bringing about increased federal coordination for workforce development programs. WIOA workforce development programs are provided and coordinated through approximately 3,000 One-Stop centers (also known as American Job Centers) nationwide, governed through local Workforce Development Boards and coordinated through the Department of Labor’s Employment and Training Administration (ETA).
Furthermore, the U.S. Department of Commerce (DOC) has made a suite of recent investments in workforce development. Through a $500 million allocation from the American Rescue Plan, the DOC’s Economic Development Administration (EDA)’s Good Jobs Challenge awarded 32 industry-led, workforce training partnerships funds to develop workforce training systems in 2022. As of December 2023, 11,000 workers have been trained and 3,000 participants have secured jobs through the Good Jobs Challenge. In FY24, EDA will be providing an additional 5-8 awards to regional workforce training systems that establish sectoral partnerships, though this is still not sufficient to meet the clear demand of Good Jobs Challenge funding, which initially received $6.4 billion in funding requests from over 500 applicants.
In 2023, the DOL’s Chief Evaluation Office and the ETA funded the Sectoral Strategies and Employer Engagement Portfolio (SSEEP), which includes three grant programs totalling approximately $188 million in funding to workforce development strategies that build relationships with employers in specific sectors to provide tailored training and good jobs to participants. Targeted sectors include renewable energy, transportation, broadband infrastructure, healthcare, climate resiliency, and hospitality. Importantly, evidence and evaluation are embedded within SSEEP. The portfolio includes a formative study, implementation studies, and assessments to identify sites for impact evaluation. The DOL continues to push for increased investment in sectoral employment strategies, putting forth a Sectoral Employment through Career Training for Occupational Readiness (SECTOR) program to seed and scale industry-led and worker-centered sectoral training partnerships in its FY25 budget proposal. SECTOR was included in the FY25 Presidential Budget, but did not make it into either the House or Senate FY25 Labor-HHS-Education appropriations bills.
These significant investments and proposals for expansion of sectoral workforce development approaches are encouraging, but they risk being uncoordinated in a federal employment and training program ecosystem that spans 43 programs across 9 agencies. Since the Government Accountability Office (GAO) recommended reducing overlap and fragmentation between these programs in 2019, DOL has taken several steps to increase coordination. The DOL should build upon this progress and establish a SETI to coordinate and broaden sectoral employment strategies across programs.
Plan of Action
The next administration should establish a Sector-Focused Employment Training Initiative (SETI), an inter-agency initiative based jointly within the Department of Labor’s Employment and Training Administration and the Department of Commerce’s Economic Development Administration. SETI would work closely with various federal intermediaries, including local Workforce Development Boards and regional Workforce Hubs, to coordinate and expand sector-focused training programs within American Job Centers, Workforce Hubs, DOL’s Sectoral Strategies and Employer Engagement Portfolio (SSEEP) and other federal initiatives, trade associations, community colleges, and local and national nonprofits. SETI would support the expansion of existing evidence-based programs like Per Scholas and Year Up as well as the establishment of new evidence-based sector-focused job training programs. Additionally, SETI would provide technical assistance to local workforce development systems on how to implement these programs and match job seekers with evidence-based training providers. It would also promote continuous improvement by supporting rigorous evaluations of promising new models. To establish SETI, the next administration should take the following specific steps:
Recommendation 1. The President should call upon Congress to direct federal funding to SETI through the annual Labor-HHS-Education appropriations bill.
This could be achieved by securing new funding through the federal budget and/or proposing tax incentives for employers that participate in the initiative. Broadly, the goal of SETI is to fund, coordinate, and expand sector-focused training programs across American Job Centers, federal workforce development initiatives, trade associations, community colleges, and local and national nonprofits. SETI would coordinate existing sector-focused training approaches across agencies to maximize current investments and expand sector-focused approaches through programs including SECTOR (which would be funded as part of SETI). SETI will ensure that the sectoral employment programming is evidence-based, effective, and coordinated. It will also include mechanisms for monitoring and evaluation for continuous program improvement. To help fund this initiative in the future, the federal government could commission an assessment (through GAO) of the array of workforce development programs across the country to identify opportunities to redistribute funding away from less effective models.
Recommendation 2. Establish the structure of SETI, which will include a guiding task force, an Executive Director, and personnel:
- The SETI task force will oversee the design and implementation of SETI. The task force should be chaired by the Executive Director and should include representatives from: the National Association of Workforce Development Boards; representatives from high-growth industries, including green energy and semiconductor industries; state and local governments, including staff from state labor offices; DOL and DOC staff overseeing the Good Jobs Challenge, Workforce Hubs, and other federal initiatives; union representatives; representatives from trade organizations, community colleges, and established sectoral job training nonprofits such as Year Up and Per Scholas. The task force should conduct consultations with industry leaders, educational institutions, labor organizations, and community groups to gather input and build support for SETI. This will help tailor the initiative to the specific needs of various regions and sectors.
- The Executive Director will chair the task force, manage the day-to-day operations of SETI, oversee hiring of personnel, and will be responsible for ensuring that the directives of the task force are carried out, reporting back regularly to the task force.
- SETI personnel will carry out the directives of the task force as delegated by the Executive Director, which will include disbursement of funds to local sectoral employment training programs and providing technical assistance.
Recommendation 3. Beginning with implementation pilots, SETI should provide technical assistance and funding to local Workforce Development Boards, national Workforce Hubs, and other intermediaries implementing federal workforce development initiatives to launch and scale sectoral employment programming.
- Implementation pilot of SETI: SETI personnel, under the direction of the Executive Director and the guidance of the task force, will work with intermediaries in select localities (e.g., local Workforce Development Boards, Workforce Hubs, etc.) to identify promising opportunities to launch or scale up sectoral employment programs. Together, local intermediaries and SETI personnel will identify industries with strong labor demand and potential for career growth, such as healthcare, IT, manufacturing, and green energy. SETI will support local intermediaries to develop and strengthen industry partnerships and generate industry buy-in for sectoral employment programs. SETI will provide technical assistance and funding to local intermediaries to leverage existing infrastructure to set up and deliver programming in partnership with industry. For example, a local intermediary such as a Workforce Development Board would receive SETI funding and technical assistance to launch and scale sectoral employment programs through local American Job Centers, trade associations, community colleges, and/or local and national nonprofits, in alignment with community needs and resources. These implementation pilots can serve as a proof of concept for SETI, providing valuable insights into the best practices for training, employer collaboration, and participant support.
- Standards of quality and best practices: Following insights gained from the implementation pilots, the existing rigorous evidence base on sectoral employment programs, and learnings from SSEEP and other federal initiatives, the SETI task force will publish standards of quality for sectoral employment programs and best practices for how local intermediaries can integrate them into existing workforce development infrastructure. Additionally, the task force will make recommendations to local intermediaries on which less effective workforce programs to scale back and how.
- Technical assistance: SETI personnel will provide technical assistance to local intermediaries to develop, grow, and strengthen sectoral employment programs that meet high quality standards and best practices. Technical assistance may include guidance on program design (ensuring key components are included), employer engagement, and participant recruitment, as well as support for building the capacity of local training providers.
- Funding: SETI will provide funding to local intermediaries to disburse to sectoral employment programs that follow standards of quality and best practices.
- Community of practice: SETI will establish and lead a community of practice of local intermediaries launching and scaling sectoral employment programs to sustain coordination and collective learning. This will build upon and implement best practices learned from the Good Jobs Challenge Community of Practice.
Recommendation 4. SETI should encourage and fund rigorous evaluations, including randomized evaluations, in partnership with research labs and consulting firms to continuously assess and improve SETI’s sectoral employment programs.
Evidence from these evaluations can help policymakers and practitioners identify effective models that should be scaled up. During the technical assistance phase, SETI personnel should embed monitoring and evaluation practices into the setup of sectoral employment programs. SETI should share successful strategies and practices identified through evaluations with states, localities, and training providers to ensure continuous improvement and widespread adoption of effective models.
Conclusion
The next administration should establish a Sector-Focused Employment Training Initiative (SETI) to expand access to quality, evidence-based sectoral employment training programs to help millions of American workers prosper. A SETI would coordinate various government job training investments and efforts by setting best practices, providing technical assistance, and delivering further funding to expand sectoral employment programs. An effective, coordinated approach to sectoral employment training programs is critical to reduce wage inequality and ensure the long-term prosperity of workers and in-demand industries during a time of rapid technological advancement.
This action-ready policy memo is part of Day One 2025 — our effort to bring forward bold policy ideas, grounded in science and evidence, that can tackle the country’s biggest challenges and bring us closer to the prosperous, equitable and safe future that we all hope for whoever takes office in 2025 and beyond.
The most effective sectoral employment programs include a combination of:
- Upfront screening for applicants on basic skills and motivation to best target program resources
- Occupational skills training targeted to high-wage sectors and leading to an industry-recognized certificate and/or credentials
- Career readiness training (sometimes referred to as soft skills) on things like time management, critical thinking, and conflict management
- Wraparound support services for participants, such as those related to job placement and retention as well as counseling and support from social workers on personal or other challenges
- Strong connections to employers in the targeted industries
A key component of ensuring participants are placed in higher paying, more secure employment is the programs’ efforts to build relationships with employers in the targeted industries. Generally, programs leverage relationships with employers in the targeted industries to secure spots for program participants or help them get employed through a referral process.
Some well known examples of effective sectoral employment programs are Year Up and Per Scholas. Year Up is a year-long program for young adults with a high school degree (or equivalent) that starts with a six-month phase of classroom training on occupational and career readiness skills and then has a six-month internship phase where participants work in entry-level positions at local employers, focusing on IT and business and financial operations positions. Per Scholas targets the IT sector and utilizes the WorkAdvance program model, providing career readiness services, occupational skills training, job development and placement services, and post employment retention and advancement services.
The core idea behind sectoral employment programs is that improvements in employment-related skills are strategically directed towards industries of strong and rising labor demand, with high-wage potential. Additionally, the programs focus on company relationship building and intermediaries like training and mentoring to break down barriers to employment for workers with non-traditional backgrounds for the targeted jobs. These two forces have led to durable gains in earnings and advancement in the labor market. Randomized evaluations of sectoral employment programs have found substantial and lasting earnings gains. A key component of sectoral employment programs is getting participants into in-demand jobs with high-wages and potential for career growth. Earnings gains resulting from sectoral employment programs are driven by increasing the share of participants working in higher-wage jobs rather than increased employment rates or increased hours worked; this is likely from participants gaining employment in the targeted sectors.
Before the rise of sectoral employment programs, job training programs tended to help participants get jobs that they otherwise would have gotten on their own a few months later. Many of these training programs did not break down barriers in accessing careers that typically employed people with college degrees and/or needed the right connections. In addition, some traditional job training programs have taken a more segmented approach – focusing only on providing training, search assistance, or soft skills. This stands in contrast to sectoral employment training programs, which utilize a more holistic approach.
The private sector tends to undersupply sectoral training in transferable skills useful to multiple employers in particular sectors. This is because individual firms face concerns of rival firms poaching their trainees and risk losing the return on investment in training to other employers. On an individual worker level, lack of information about training opportunities and limited resources to invest in training themselves can also serve as barriers. A federally coordinated sectoral training initiative that leverages intermediaries to provide training and other important services can bypass these barriers, and the proposed structure for SETI is aligned with WIOA’s existing approach.The federal government is well positioned to provide national, unified guidance on how to implement the principles of effective programs in line with the evidence, while local Workforce Development Boards can provide expert knowledge on the localized needs of their communities and promising employer partnerships. Additionally, given limited capacity of state and local entities, a federal SETI initiative would provide support for jurisdictions to implement effective sectoral employment programs for their communities.
Future research about sectoral employment programs can help advance implementation to increase the upward mobility of even more Americans, which is why it is critical a SETI spur further rigorous evaluation. Key opportunities for future research include:
- Investigating the effectiveness of sectoral employment programs that have a remote component versus more intensive, on-site programs, and whether current programs are effective when expanded through online learning. This will help inform if remote expansion allows for more rapid and lower-cost scaling up of successful evidence-based training programs.
- Testing whether changes to wraparound supports and other program components are needed in order to maintain the effectiveness of sectoral employment programs if upfront screening criteria is modified to enable a broader population of workers to access them. Such an effort may provide a pathway for more workers to access quality jobs, but it may also demonstrate reduced effectiveness in a broader population.
- Understanding whether or not employers who hire through sectoral employment programs change their broader hiring practices to be more inclusive of people with non-traditional backgrounds, creating more opportunity for people with non-traditional backgrounds.
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